In an instant, Ron Williams of Englewood became the voice of the people of New Jersey.
“You mean they still didn’t settle that sales tax thing yet in Trenton?” exclaimed the disappointed horseracing enthusiast outside the shut gates of the Meadowlands racetrack last week. “I just can’t believe it. They can’t be serious.”
Believe it he must. The New Jersey budget battle turned deadly serious on July 1 when Gov. Jon Corzine, after taking part in unsuccessful negotiations with members of the state legislature over his desire to raise the state sales tax 1 percent, ordered a shutdown of the state government until the budget impasse ends.
Corzine has promised to get tough in balancing the state budget, rather than relying on gimmicks to temporarily fill gaps.
Passage to an impasse
The roots of the predicament are deep.
Under the successive administrations of governors Kean, Florio, Whitman, McGreevey and Codey, state budgets continued to rise without an equivalent increase in revenue from state sales tax, a phenomenon that occurred due to a lack of political will.
The resulting rise in local property taxes led in part to Corzine’s election in November 2005. Voters, looking at Corzine more in his role as the former C.E.O. of Goldman Sachs than as a U.S. Senator, elected him in the hope that his financial savvy could fix a state budget deficit that now amounts to around $4.5 billion.
When Corzine proposed his $31 billion state budget in March, it appeared that he had looked at the ledger as a hard-nosed businessman rather than a cautious politician. He suggested a rise in the state sales tax from 6 to 7 percent, along with over $2 billion in spending cuts.
This proposal has been vehemently opposed primarily by state Assembly Democrats, led by Assembly Speaker Joseph Roberts from Camden County in south Jersey, who proposed alternatives that included other taxes and spending cuts.
Corzine held firm, claiming that a 1 percent increase in the sales tax would lead to an additional $1.1 billion in revenue for the state.
A compromise proposal floated by State Senate Pres. and former Gov. Richard Codey called for approval of the sales tax hike, but nearly half of the projected $1.1 billion raised in revenue would be set aside for a property tax relief fund.
While Corzine reportedly agreed with this idea, Roberts refused, asking that the entire $1.1 billion go to property tax relief.
When both sides would budge no further by the July 1 state constitution deadline, Corzine declared the shutdown.
He had no choice: without a budget, the state does not have the authority to spend money.
Hudson County legislators fractured
Surprisingly to some, Corzine has not even been able to count on the six Democratic members of the state Assembly from Hudson County.
After all, Corzine lives in Hoboken, and much of the leadership of the state Democratic Party is from here.
While Assemblyman Vincent Prieto of Secaucus, Assemblyman Charles Epps of Jersey City, and Assemblywoman Joan Quigley of Jersey City voted for Codey’s compromise plan, according to sources privy to the closed-door vote, Assemblymen Albio Sires of West New York, Lou Manzo of Jersey City and Brian Stack of Union City voted against it.
Taking a break from yet another negotiation meeting, Prieto spoke last week about the contentious atmosphere in Trenton.
“There is a lot of passion,” he said. “I believe that ultimately, the only way to get a truly recurring revenue to cover recurring expenses and be fiscally responsible would be to include a sales tax rise, although my mind is still open to alternatives. We are dealing with real people with real lives who need to get back to work.”
On the other side of the issue, Assemblyman and Union City Mayor Stack said, through his Chief of Staff Wendy Martinez, that he could not support Codey’s compromise plan because if there is an increase in the sale tax, it should be tied solely to property tax relief.
Martinez added that Stack will continue to be fully engaged in negotiations until a resolution is agree upon, if it takes days or even weeks.
Manzo believes that the budget battle is partly a matter of Corzine’s political inexperience.
“Joe Roberts has put together a powerful coalition of support that opposes an increase in the state’s sales tax,” he said. “The assembly wants to find a way to fix budget without the sales tax.”
While Corzine appears to oppose increasing income taxes to the rich, Manzo said most Republicans and Democrats oppose a sales tax increase that would hurt the middle class and working poor the hardest.
Manzo said Corzine’s attempt to lobby Republicans is a mistake because Roberts already has a 30 Republicans lined up. In order to beat Roberts in the Assembly, Corzine needs 41 votes out 48 Democrats.
“Hudson County legislators are split,” he said.
Manzo said Corzine lacked the political experience for this show down.
“Codey already told Corzine that he is going to lose this one,” Manzo said. “If we pass our version and the Governor vetoes it, things will get ugly.”
How to make it up
Manzo said the sales tax revenues can be made up in several areas, such as reducing the back payments due to the state pension fund.
“We’re so far behind that it won’t matter if we cut it a little this year,” Manzo said.
In conversations with Corzine, Manzo learned that the governor fears the wealthy will leave New Jersey if income taxes are increased.
“But those people are flocking into New Jersey. It is the middle class that is leaving and the middle class that will get hurt most by a sales tax,” Manzo said.
Manzo said Jersey City will get hurt most, despite the fact that the city is a revenue generator for the rest of the state.
“Jersey City doesn’t get back from Trenton nearly as much as it sends in taxes every year,” Manzo said, noting that the development along the Hudson County Gold Coast has helped the rest of the state.
Although some claim a corporate business tax would hurt stand-alone businesses, Manzo said he prefers this to a sales tax that would hurt the state’s most vulnerable.
Affecting lives
Many real lives have been adversely affected around the Garden State due to the state government shutdown.
First, approximately 45,000 state employees out of a total of 80,000 were placed on immediate furlough.
This move was followed in close succession by pieces of the state government drying up. The Department of Motor Vehicles offices were closed.
The state lottery, which brings around $2 million into state coffers a day, ceased selling tickets.
A special Independence Day legislative session failed to wrest the state free from the budget crisis.
By July 5, state parks and beaches had closed. That morning, Atlantic City’s 12 casinos closed their doors, with the additional loss of about $1.3 million in daily revenue for the state.
The casino closure marked the first time in the 28-year history of legalized gambling in Atlantic City that the doors were shuttered.
All the cards were still on the table in Trenton, but everything else had folded.
Locally
In downtown Secaucus, the budgetary brinkmanship in Trenton began to have a deleterious effect. At the Teamo news stand and stationery store on Front Street, the owner, who did not want to be named for “fear of offending the government,” mentioned that instead of the usual 500 to 600 customers a day he normally gets, many of whom buy lottery tickets, only about 100 daily customers have come to his store after the shutdown. “The lottery affects every aspect of our business,” he said. “I just want it back.”
At Marra’s Drug Store down the block, business was “slower,” according to manager Angelo Marra.
Secaucus native and longtime resident Grace Cuozzo was not afraid to offend the government.
“People in my building are going crazy because they can’t buy their lottery tickets,” she said. “It’s like they’re in withdrawal. Why is it taking so long to fix the damn budget? It’s just not fair.”
Fate was even crueler for Ron Williams and Gene Russo. Williams, from Bergen County, and Russo, from Burlington County, had both taken time out of their schedules to enjoy a day at the horseracing track at the Meadowlands only to find it closed. Sitting on a bench outside the entrance, North and South Jersey were united in woe.
“I’ve been coming here since 1976, and if anyone has a right to complain, it’s me,” Williams said. “They’ve got tons of my money.”
Williams doesn’t mind parting with some more of his money in order to get back inside the track.
“Do I approve of the raising of taxes?” he asked. “Well, I’m going to have to pay them anyway. It doesn’t matter, not for me, not for everybody. If Corzine says we have to do this, then we have to do this. Let’s go already.”
Light at the end of the tunnel?
In a statement issued on July 5, Corzine appeared ready to go and fight the continuing budget battle.
“We can’t simply make things up because we don’t like the consequences of the laws we created,” he stated. “Just like we simply can’t make up numbers and say the budget’s balanced. We can’t give the public a false impression that answers are both easy and painless.”
Back on the bench, Russo just wants the pain to end soon.
“I’m disappointed,” he said. “How can you close state parks, other facilities, and the casinos in the middle of the summer tourist season? They are absolutely nuts.”